Turkey’s primary surplus is on target

ANKARA – Turkish budget data for the first eight months of the year beat market expectations yesterday, but analysts still sounded a note of caution about whether the government can meet year-end targets as expenditures mount. Turkey’s primary budget surplus was 15,500 trillion lira (around $11.2 billion) in the January-to-August period, compared to a year-end target of 20,283 trillion lira, Finance Minister Kemal Unakitan told reporters at a news conference. The budget produced a deficit of 28,443 trillion lira in the first eight months of the year against a year-end target of 45,167 trillion lira. The primary budget surplus, which excludes interest payments on debt, is a key target under a $16 billion pact with the International Monetary Fund. The surplus in the same period last year was 12,916 trillion lira, or $7.8 billion at exchange rates at the time. Turkey targets a primary surplus of 6.5 percent of the gross national product by the end of the year. Its mountain of domestic debt stood at around $128 billion in July. «The August figures are promising, but the 6.5 percent target is still difficult to achieve,» said Volkan Kurt, economist at ABN Amro in Istanbul. «The problems are very clear. The social security system absorbs quite a lot. There are tax rebates and no room to maneuver on non-interest expenditures,» Kurt said. Meanwhile, state bodies, including the large military, will push toward the end of the year for greater allowances, Kurt said. «December will be the huge deficit month.» Unakitan said the government would draw up a supplementary budget to account for the cash it will need for tax rebates and to prop up Turkey’s troubled social security system. «Because of the supplementary budget, we will not surpass our expenditure target,» Unakitan said. Budget revenues were 63,600 trillion lira against an end-2003 target of 100,800 trillion lira, Unakitan said, while expenditures reached 92,100 trillion lira, compared to a year-end target of 145,900 trillion lira.

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